Infineon Outperforms Expectations in Current Performance.
In the ever-evolving world of the semiconductor industry, Europe's largest chipmaker, Infineon, has found itself indirectly affected by US tariffs. However, the company has demonstrated resilience and adaptability in the face of these challenges.
Infineon recently reported exceeding analyst expectations in its operating business, a testament to its robustness. Yet, the dampening demand for electronic components due to US President Donald Trump's protectionism has had a noticeable impact, particularly on its automotive business. The increased costs and trade uncertainties resulting from US tariffs have been a significant hurdle.
To counteract this impact, Infineon has taken strategic steps, including the acquisition of Marvell Technology’s automotive Ethernet business for $2.5 billion. This move is intended to accelerate Infineon’s system capabilities for software-defined vehicles and broaden its technology portfolio, thereby strengthening its competitive position.
The acquisition is being financed partly through committed acquisition facilities from banks (€1 billion and $1 billion), with the remainder coming from Infineon’s own liquidity. This strategic investment reflects a commitment to long-term growth and resilience in the automotive semiconductor market amid tariff pressures.
While there are no explicit details about other specific tariff mitigation tactics, the focus on expanding product and technology offerings suggests a forward-looking approach to maintaining market leadership despite tariff challenges.
Infineon's heavy reliance on the automotive industry, which has recently lowered its forecasts, has added to the company's woes. The company's investments have been reduced for the current fiscal year 2025, now planned at €2.2 billion, a decrease of €100 million from the originally planned €2.5 billion.
Despite these challenges, Infineon's stock has shown signs of recovery. Following the publication of its half-year report, its share gained 5.6% to €35.66 in Xetra trading. The company generated 3.7 billion euros in revenue in the preceding three-month period, a 3% increase from the previous quarter. The segment result was 668 million euros in the same period, an 11% increase.
CEO Jochen Hanebeck painted a mixed picture of the situation, citing signs of an upturn but also increased short-term ordering due to US tariffs. The margin fell to 17.2% from 20.6% in the same period, a decline that can be partly attributed to the tariff-related costs.
Looking ahead, Hanebeck aims to reach the €1 billion mark in the following year. He also expects the turnover with semiconductors for AI data centers to double to around €600 million in 2025. Despite the reduced forecast for the current fiscal year, the management targets an operating margin based on segment result in the "high teens" for the year, a decrease from the previously forecasted around 15%.
Caution is advised in Infineon's auto business until the end of the calendar year. In the first nine months of the fiscal year 2025, Infineon recorded an operating result of €1.84 billion, a 19% decline.
Despite the challenges, Infineon continues to navigate the complexities of the global semiconductor market, demonstrating a commitment to growth and resilience in the face of tariff pressures.
The strategic acquisition of Marvell Technology’s automotive Ethernet business by Infineon, for $2.5 billion, aims to strengthen its competitive position in the automotive semiconductor market by broadening its technology portfolio and accelerating its system capabilities for software-defined vehicles.
Infineon's CEO, Jochen Hanebeck, is optimistic about the future, aiming to reach €1 billion in the next year and expecting the turnover with semiconductors for AI data centers to double to around €600 million in 2025, despite the reduced forecast for the current fiscal year.
